Banks Board Bureau: Banks Board Bureau won’t pick heads of financial institutions

MUMBAI| NEW DELHI: The government has taken away the task of selecting candidates to run state-run financial institutions from the Banks Board Bureau, narrowing the mandate of the independent body set up a year ago to primarily help reform struggling banks.

A committee headed by financial services secretary Anjuly Chib Duggal will now select CEOs for four financial institutions where the posts are lying vacant, a senior government official said. This has raised concerns over conflict of interest, because the list of candidates the panel has to screen includes officials from the finance ministry, where Duggal also works.

The government has received close to 90 application for the top posts at IIFCL, IFCI, Sidbi and Exim Bank. Besides the financial services secretary, additional secretary GC Murmu is also a member of the panel. The bureau, headed by former Comptroller and Auditor General Vinod Rai, was established in April 2016 with an aim to free the government of the administrative task of appointing top executives and overseeing their governance standards at state-run banks and financial institutions. It will continue to have the mandate to select top executives to run state-run banks.

Rai could not be reached for comment as he was travelling overseas. Other members of the panel include Allahabad Bank’s former chairman Subhalaxmi Panse, consultancy firm IndiaAsia’s promoter Pradeep Shah, central bank deputy governor NS Vishwanathan and IIM-Indore professor RT Krishnan.

The bureau itself has seen some developments in recent weeks. HN Sinor, a member, resigned in early May on grounds that he was disappointed with its functioning. But, after being pursued by Rai, he withdrew the resignation. Also, the government has made changes in the top management of state-run banks by going against the bureau’s recommendations.

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The CEOs of two large banks — Usha Ananthasubramanian of Punjab National Bank and Melwyn Rego of Bank of India — were moved to smaller banks, Allahabad Bank and Syndicate Bank, without seeking the bureau’s consent. Sunil Mehta and DB Mohapatra, who were selected by the bureau for Allahabad Bank and Syndicate Bank were asked to take charge of PNB and Bank of India, respectively.